Residential Tenancies Reform 2025: Striking the Right Balance

Introduction

On 10 June 2025, the Government announced a range of new policy measures with two seemingly irreconcilable aims:

• The boosting of investment in the supply of homes for rent; and

• Further extending protections for renters by providing significant improvements to security of tenure for all new tenancies and introducing a national system of rent control which will, in times of high inflation, cap rent increases for most tenancies at a maximum of 2%.

What is Proposed

Significant improvements to tenant protections for all new tenancies after March 1st 2026 will be introduced with the aim of enhancing security of tenure. Landlords will be categorised as:

• “Larger Landlords” (those with four or more tenancies); and

• “Smaller Landlords” (those with three or fewer tenancies).

Tenancies of unlimited duration are to be enhanced by the introduction of rolling, six-year tenancies.

While all landlords will continue to have the right to terminate a tenancy where there is a breach of tenant obligations or where the dwelling is no longer suited to the needs of the tenant household, larger landlords will no longer be able to avail of “no fault” evictions (where the tenant has complied with their obligations under their letting agreement) except in very limited circumstances.

Smaller landlords will be able to terminate a tenancy during the six-year tenancy but only where they require the dwelling for an immediate family member (a parent, child or spouse) or where they face “hardship”, which will be defined in legislation. This will likely include separation, homelessness, an emigrant returning from abroad or bankruptcy.

All landlords who will enter into a new tenancy agreement on or after 1 March 2026 will have the right to reset rent where the rent is below market at the end of each six-year tenancy unless a ”no fault eviction” occurs.  Under the Residential Tenancies Act, it will remain prohibited to set a rent above market rent. All landlords will be able to sell a property with a sitting tenant at any time.

Finally, to “incentivise” new development of apartments, rent increases in new developments, subject to a commencement notice to planning authorities on or after 10 June 2025 will be capped by the Consumer Price Index.

To allow for sufficient time to develop the necessary legislation and to communicate the changes to landlords and tenants, it is proposed to introduce the new arrangements for tenancy protections from 1st March 2026.

What has Happened

As a first step to implementing these reforms, on 20 June 2025 the Government passed the Residential Tenancies (Amendment) Act 2025 which extends Residential Protection Zones (“RPZs”) nationwide until 28 February 2026. This means that any increase in rent on residential tenancies or on fees paid in respect of licences of student specific accommodation throughout Ireland are now subject to a cap of the lower of 2% or the inflation rate recorded by the Harmonised Index of Consumer Prices. The Government claims this will protect more than 40,000 tenancies which, before 20 June, were outside RPZs.

The extension of RPZs nationwide will also have a knock-on effect on the renting of certain holiday homes. The Residential Tenancies (Amendment) Act 2019 provided that the use of a house (or apartment) or part of a house/apartment situated in an RPZ for short-term letting purposes is a material change of use of the house/apartment for planning purposes and could be subject to enforcement action from the relevant local planning authority unless the planning permission for the house/apartment already permits short-term lettings.

“Short-Term Letting” is defined in the 2019 Act as a lease or licence of a house/apartment or part of a house/apartment for a period of 14 days or less. This could mean that thousands of holiday or Airbnb rental properties are now in breach of the Planning Acts if let out for periods of less than 15 days. The punishment to a landlord for entering into short-term lettings includes an initial fine of up to €5,000 together with daily fines of €1,500 and, however unlikely, up to six months in prison.

The net result of this, intentional or otherwise, may be that a significant number of units which previously were only available on more lucrative (for the landlord) short-term holiday lettings may now be available on the less lucrative long-term residential rental market. Alternatively, the units may be put up for sale increasing supply of housing in a second-hand market crying out for more stock.

How this plays out may be determined by the willingness of local authorities to bring enforcement proceedings against the properties in question to compel landlords to forego the more lucrative Airbnb market and whether or not the Government can implement the proposed Short-Term Letting and Tourism Bill announced by its target date of May 2026.

What Will it Mean

The Government has given itself until 1 March 2026 to fully implement its proposals so we await the draft legislation to properly assess how effective these proposals will be. It has never been popular politically to provide support to landlords, be they private or institutional, despite their regularly acknowledged importance to the rental market. As a result, it will be interesting to see how the Government proposes to balance its twin aims of improving the situation for renters while, at the same time, stimulating investment and keeping existing landlords in the market.

While capping rent increases for up to six-year periods will sit well with tenants and the wider voting public, it’s hard to see how this will be an attraction to landlords or, as importantly, to investors in a world where interest rate and inflation spikes are likely to be far more common moving forward than in the first 20 years of the century.

The Government needs to bear in mind when drafting the legislation that more than 25% of all landlords in Ireland rent just one property and the much-lambasted institutional landlords account for less than 10% of the 230,000 rental properties registered with the Residential Tenancies Board at the beginning of 2024. The demarcation between large and small landlords is a step in the right direction in this regard but more could be done.

Introducing further incentives for landlords, for example extending tax relief on interest payments,  alongside the proposed tenant protections, could be essential for the proposed policy changes to work.

Further Information

For further details about the Residential Tenancies (Amendment) Act 2025 or any Housing matter, please contact Partner Paul McCutcheon or a member of our Property Team.